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Subcontractor agreement

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The Subcontractor and General Contractor may be referred to individually as “Party” and collectively as “Parties”

This Subcontractor Agreement (the “Agreement”) is made valid upon signature by both Parties.

The General Contractor entered into a contract dated [Insert date] (the "Original Contract") with [Insert name of the person who originally contracted with the General Contractor] (hereinafter referred to as “the Client”) of the following address: [Insert full address of the Client]

Under the Original Contract, the General Contractor has agreed to provide the following services to the Client: [Insert services the General Contractor contracted to provide to the Client]
The General Contractor wishes to subcontract with the Subcontractor for a portion of the services contemplated by the Original Contract. The subcontractor is willing and qualified to provide such services.

THEREFORE, in consideration of the mutual promises and covenants herein contained, the Parties hereto agree to the following:

1. DESCRIPTION OF SERVICES:

Beginning on [Insert date of beginning], the Subcontractor will provide to the General Contractor the following services (known collectively as the "Services"): [Insert description of services].
The General Contractor will make available to the Subcontractor all plans, specifications, drawings, blueprints, and similar construction documents necessary for the Subcontractor to provide the Services.

Any such materials shall remain the property of the General Contractor. The Subcontractor will promptly return all such materials to the General Contractor upon completion of the Services.

2. WORKSITE:

The Subcontractor will provide all labor for the construction described above at the property of the Client, located at the following address (the "Worksite"): [Insert address where the Subcontractor has to work].
The Client and the General Contractor will allow free access to work areas for the Subcontractor's workers and vehicles and will allow areas for the storage of materials and debris.
The Subcontractor agrees to keep the worksite clean and orderly and to remove all debris as needed during the hours of work in order to maintain work conditions that do not cause health or safety hazards.
During the term of this Agreement, the Subcontractor may erect one temporary sign showing its name, service mark, trade name, or another commercial name, identifying the Subcontractor as performing services on the construction project. The sign must be appropriate in appearance, style, and size, and must conform to all applicable laws.

3. MATERIALS AND/OR LABOUR PROVIDED:

The General Contractor shall provide to the Subcontractor a list of each and every party furnishing materials and/or labor to the Subcontractor as part of the Services they shall provide. The Subcontractor shall, in return, submit a list of all amounts due or expected to be due with regards to the provision of the services herein described.

4. CHANGE ORDERS:

The General Contractor or any allowed person may make changes to the scope of the work from time to time during the term of this Agreement.
Any such changes or modifications shall only be made in a written "Change Order" which is signed and dated by all Parties. Such Change Orders shall become part of this Agreement.
The General Contractor agrees to pay any increase in the cost of the construction work as a result of any written, dated, and signed Change Order.
In the event the cost of a Change Order is not known at the time a Change Order is executed, the Subcontractor shall estimate the cost thereof and the General Contractor shall pay the actual cost whether or not this cost is in excess of the estimated cost.

5. PAYMENT:

Payment shall be made to the Subcontractor in the total amount of [Insert amount and currency] in one lump sum payment due upon completion of the services rendered to the General Contractor by the Subcontractor.
For any payment that is not paid within [Insert number of days] days of its due date, the General Contractor shall pay a late fee of [Insert amount].
In addition to any other rights or remedies provided by law, the Subcontractor may treat the General Contractor's nonpayment for services rendered by the Subcontractor as a material breach of this Agreement and may cancel the Agreement or seek legal remedies as the Subcontractor desires.

6. LEGAL COMPLIANCE:

The Subcontractor shall provide the Services in a workmanlike manner, and in compliance will all applicable federal, state, and local laws and regulations, including, but not limited to, all provisions of the Fair Labor Standards Act, the Americans with Disabilities Act, and the Federal Family and Medical Leave Act.

7. PERMITS:

The Subcontractor shall obtain all necessary building permits.
The Subcontractor shall apply for and obtain any other necessary permits and licenses required by the local city/municipal government to do the necessary work, the cost thereof shall be included as part of the payment to the Subcontractor under this Agreement.
The General Contractor will fully cooperate with the Subcontractor in the obtaining of any permits and licenses, as necessary.

8. INSURANCE AND INDEMNITY:

Before work begins under this Agreement, the Subcontractor shall furnish certificates of insurance to the General Contractor, substantiating that the Subcontractor has placed in force valid insurance covering its full liability under the Worker's Compensation laws of the of [Insert name of state] and shall furnish and maintain general liability insurance, and the Subcontractor's risk insurance for injury to or death of a person or persons, and for personal injury or death suffered in any construction-related accident and property damage incurred in rendering the Services.
The Subcontractor shall maintain insurance policies, of each and every type, and with provisions and coverage amounts substantially identical to the corresponding requirements of the General Contractor as described by the terms of the Original Contract.
With the exception that this Section shall not be construed to require indemnification by the Subcontractor to a greater extent than permitted under the public policy of [Insert name of state], the Subcontractor may agree to indemnify the General Contractor against, hold it harmless from, and defend the General Contractor from all claims, loss, liability, and expense, including actual attorney's fees, arising out of or in connection with the Subcontractor's services performed under this Agreement.
This indemnity shall be provided even if the General Contractor is partly responsible for the claim, damage, injury, or loss, but the Subcontractor shall not provide indemnity against claims or losses deemed to be caused by the negligence, willful misconduct, or breach of contract of the General Contractor or the General Contractor's agents or employees.

9. WARRANTIES:

The Subcontractor represents and warrants that it will perform the Services using reasonable care and skill for a Subcontractor in their field and that any results, end products, or materials given by the Subcontractor to the General Contractor under the terms and conditions of this Agreement will not infringe on or violate the intellectual property rights or any other right of any third party.

10. CONFIDENTIALITY:

The term "Confidential Information" shall include any proprietary information, in whatever form, that:

Is provided by the General Contractor or the Client to the Subcontractor, including information regarding the Client or the General Contractor's businesses, finances, prospects, operations, products, employees, technologies, contact lists, and financial models (including not only written information but also information transferred verbally, visually, electronically or by any other means); or
Concerns any agreements that the Subcontractor may aid the General Contractor or the Client in entering into in the course of their providing services; or
Consists of analysis and/or any other internal non-redacted memoranda or other documents prepared by the Subcontractor derived from, or including material portions of, the Confidential Information.

The Subcontractor shall safeguard and keep confidential the Confidential Information and shall not disclose any Confidential Information to any other person or entity.
The Subcontractor shall not use the Confidential Information for any purpose other than those related to the services they provide to the General Contractor.
All such Confidential Information and any copies obtained thereof shall be returned to the General Contractor promptly upon its written request and shall not be retained in any form by the Subcontractor.

11. TERMINATION:

This Agreement shall terminate automatically when the Subcontractor's work has been completed.
This Agreement may also be terminated by either Party, upon notice in writing:

If the other Party commits a material breach of any term of this Agreement that is not capable of being remedied within [Insert number of days] days or that should have been remedied within [Insert number of days] days after a written request and was not;
If the other Party becomes unable to perform its duties hereunder, including a duty to pay or a duty to perform.

12. RELATIONSHIP OF PARTIES:

The provisions of this Agreement are not intended to create, nor shall be deemed or construed to create, any joint venture, partnership, or other relationship between the General Contractor and the Subcontractor other than that of independent entities contracting with each other solely for the purpose of carrying out the provisions of this Agreement.
Neither of the Parties to this Agreement, nor any of their respective employees, agents, or other representatives, shall be construed to be the agent, employee, or representative of the other Party.
Neither Party shall have the authority to bind the other Party nor shall a Party be responsible for the acts or omissions of the other Party, unless otherwise stated in this Agreement.
The Subcontractor expressly acknowledges that the Subcontractor is not an agent, employee, or representative of the Client and covenants to represent itself accordingly.

13. FORCE MAJEURE:

If performance of this Agreement or any other obligation under this Agreement is prevented, restricted, or interfered with by causes beyond either Party's reasonable control, and if the Party unable to carry out their obligations gives the other Party prompt written notice of the circumstances, then the obligations of the Party invoking this provision shall be suspended to the event necessary by such circumstances.
The term "Force Majeure" shall include, but is not limited to, acts of God, fire, explosion, vandalism, flood, storm, illness, injury, earthquake, general unavailability of essential materials, orders of military or civil authority, national emergencies, riots, strikes, lock-outs, work stoppages, or other labor disputes or supplier failures.
The Party excused by such events shall use all reasonable efforts under the circumstances to avoid or remove such causes of non-performance and shall proceed to perform with reasonable dispatch whenever such causes are removed or ceased.

14. GENERAL PROVISIONS:

Entire Agreement: This Agreement contains the entire Agreement of the Parties regarding the subject matter of this Agreement, and there are no other promises or conditions in any other Agreement, whether oral or written.
Severability: If any provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable.

If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

Amendment: This Agreement may be modified or amended if and only if the amendment is made in writing and signed by both Parties.
Waiver of Contractual Rights: The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that Party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.
Applicable Law: This Agreement shall be governed by the laws of [Insert name of state or country].

Disclaimer: Template does not constitute any form of legal advice, and the User is at all times encouraged to request external specific legal advice in respect of the execution of legal documents.

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What is a subcontractor agreement?

A subcontractor agreement is a formal contract between a contractor and a subcontractor that outlines the terms and conditions for completing specific tasks within a larger project.

Unlike employees, subcontractors are classified as independent contractors, which means they are not directly employed by the contractor but hired to perform specialized services or tasks on a project-by-project basis.

This agreement delineates the scope of work, payment terms, project deadlines, confidentiality clauses, and other relevant provisions to ensure a clear understanding and smooth collaboration between the parties involved.

Why is a subcontractor agreement important?

A subcontractor agreement is crucial for several reasons. Firstly, it legally safeguards the contractor by clearly defining the terms of the arrangement, responsibilities, and expectations of both parties involved. This helps mitigate potential disputes or misunderstandings that may arise during the project.

Secondly, the agreement provides a comprehensive outline of the scope of work, project deadlines, payment terms, and any other pertinent details, ensuring that the subcontractor is fully informed and equipped to perform their tasks to the required standards.

By establishing a clear understanding upfront, the subcontractor agreement helps maintain transparency and accountability throughout the project, ultimately contributing to its successful completion.

What’s the difference between an employee and a subcontractor?

That’s a great question. While there are many differences between an employee and a subcontractor, we’ve laid out the most critical distinctions below:

Taxes: Employees' taxes are automatically withheld by their employer. Conversely, subcontractors are responsible for handling their taxes, including calculating and paying self-employment taxes.
Benefits: Employees often receive health insurance, retirement plans, and paid time off from their employer. Subcontractors typically do not receive benefits from the contracting company and are responsible for their own insurance and retirement planning.
Conduct: Employees are subject to the company's policies and procedures, including codes of conduct and workplace behavior guidelines. Subcontractors are expected to conduct themselves professionally and fulfill the terms of their contract with the contracting company, but they are not bound by the same internal policies as employees.

Understanding these differences can help employers and workers navigate the complexities of employment arrangements and ensure compliance with legal and regulatory requirements.

What should your subcontractor agreement include?

Scope of work: This outlines the project details and what the subcontractor has to do.
Duration of work: If the project has any deadlines, they should be specified here.
Payment & billing: This section details the rates paid to the subcontractor (amount, hourly vs. flat fee, performance-based wage, etc.) and how payment will be made (cash, bank transfer, etc.). It should also include a buyout clause in case the project goes badly.
Status: This clarifies that the subcontractor is an independent contractor and not a full-time employee and is responsible for their taxes.
Non-disclosure: This clause holds the subcontractor responsible for disclosing any sensitive information related to the project.
Non-competition: This ensures that the subcontractor cannot work directly with the contractor’s client, even in the future.
Work-for-hire: This grants ownership of any work done by the subcontractor to the contractor
Insurance: Details that the subcontractor is responsible for their insurance coverage.
Assignment: This stipulates whether a subcontractor can hire a subcontractor themselves.
Indemnity: This holds the subcontractor responsible for the quality of their work and protects the contractor in case of any disputes related to the subcontractor’s work.
Promises and warranties: This specifies that the subcontractor must deliver original work and is responsible for making any edits or corrections themselves if needed.
Arbitration: This outlines how any disputes will be resolved (e.g., third-party arbitration, lawsuit, etc.).
Termination: This outlines the conditions under which the contract may be terminated prematurely, the notice period for termination, and payment details.
Jurisdiction: This determines which state’s local laws the project follows.
The entirety of the agreement: This clause states that only the details included in the written agreement are covered by the contract. Anything that is not included can not be implied or assumed.

What should a subcontractor agreement not include?

To avoid the risk of misclassifying a subcontractor as an employee, contractors must refrain from providing certain benefits or resources or referring to them in the contract.

Here's a list of what should not be provided to subcontractors:

Benefits: Subcontractors should not receive healthcare coverage, retirement plans, paid time off, or sick leave. Since subcontractors are not considered employees, offering benefits could blur the classification lines and lead to legal issues.
Tools or materials: Qualified subcontractors should have the tools and materials to complete the job. Contractors should not provide additional resources beyond what is outlined in the subcontractor agreement. This ensures clarity and delineates the responsibilities of each party involved.
Tax withholding: Unlike employees, subcontractors are responsible for filing and paying taxes.
Training: Subcontractors should be fully trained professionals capable of completing their assigned tasks without extensive direction or additional training. While employers are responsible for teaching their employees, subcontractors should possess the necessary skills and expertise to fulfill their contractual obligations independently.

Who is the general contractor, and what is their role?

The general contractor (GC) is the party that initially contracted directly with a client to perform construction services. The GC communicates directly with the client who owns the property.

General contractors have smaller portions of larger projects they prefer not to or cannot do themselves because of their specialized nature. Therefore, the general contractor contracts those portions to another party, the subcontractor.

The subcontractor works on the property, often providing specialized construction services like electrical work, flooring installation, or plumbing, and communicates with the GC.

Since the general contractor is the only one in direct contact with the client, they are responsible to the client for all of the work done, including the work done by the subcontractor. If there is a problem with the subcontractor's work, the client will contact the GC to rectify that error.

Store all of your subcontractor contracts in one place

Keep all your subcontractor agreements organized and accessible with Contractbook. Our platform provides a centralized location to store all your essential documents, including detailed subcontractor agreements like the template above.

This comprehensive agreement outlines when and how the subcontractor will perform construction services, ensuring clarity and accountability for both parties. With Contractbook’s AI Insights, you can quickly summarize and access critical details such as identifying information, project timelines, payment arrangements, and essential provisions regarding indemnification and insurance.

Whether a general contractor or subcontractor, Contractbook streamlines the agreement process, allowing you to efficiently manage your construction projects while ensuring compliance with applicable laws and regulations. Say goodbye to scattered paperwork and hello to seamless contract management with Contractbook.

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